Abstract

We study equilibrium behavior in incomplete-information games under two in-formation constraints: seeds and spillovers. The former restricts which agents can initially receive information. The latter specifies how this information spills over to other agents. Our main result characterizes the equilibrium outcomes under these constraints, without making additional assumptions about the agents’ initial information. This involves deriving a “revelation-principle” result for settings in which a mediator cannot communicate directly or privately with the agents. Our model identifies which spillovers are more restrictive and which seeds are more impactful. Moreover, it generates predictions that hold robustly under a general class of spillover processes, which includes strategic communication. We apply our results to a problem of optimal organization design.

Paper